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Fixed cost are purely overheads, why are they sometimes carried forward in npv analysis like Tramont Pilot paper for example. Why carry them forward? I get the inflation part though.
In f9, you said if they are incremental costs, perhaps as a result of expansion, only that would be necessary. After the first year, aren’t they like year 1 sunk costs? Please clarify.
The fact that fixed costs are overheads is of no relevance.
If they result in addition cash outflows then they are relevant.
This question says that they will be GR 30M in the first year (and they are extra costs because this is a new operation). It also says immediately below the the costs are expected to increase in line with inflation.
They are not being ‘carried forward’. You would expect fixed costs to be incurred every year (they are things like rent of a factory)!
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